How to Set Up an LTD Company

LTD is a company legal structure also commonly known as an LLC, or limited liability company. Learn how to register your business as a limited company.

Instructions

Step 1: Know the advantages of an LTD Know the advantages of an LTD. LTD status offers members a corporation's limited personal liability and a partnership's tax flexibility.

TIP: It's typically a member's investment in the company that determines the liability amount that they are responsible for.

Step 2: File Articles of Organization File your company's Articles of Organization with your state's Secretary of State. This is usually a form that requests the company's name and its members, along with their contact information.

Step 3: Draft an LTD agreement Draft an LTD agreement that includes each member's ownership percentage, as well as their roles and responsibilities. Have an attorney check the agreement.

Step 4: Apply online for an EIN Go to the IRS website at irs.gov to apply for an Employer Identification Number, or EIN. Fill out Form 8832, print it, and send it to the IRS Service Center, which can be found at irs.gov.

Step 5: File for a state tax number File for a state tax number. Out-of-state companies may be required to submit additional documents, like a Certificate of Authority, to transact business.

TIP: Some states charge annual fees and taxes that can take away from the economic advantage of forming an LLC.

Step 6: Check individual state limited company laws Check individual state limited company laws through links at the Business.gov website. Filing requirements can differ from state to state.

Step 7: Help protect your status Help protect your LTD company status by laying out formal procedures, like a yearly meeting among members, even if it is not required by the state. Congratulations on your new LTD company!

FACT: Sixty-three percent of all Fortune 500 companies have filed certificates of incorporation in the state of Delaware.